Karvy Stock Broking Limited has maintained ‘Buy’ rating on Sterlite Industries Ltd stock to achieve a target of Rs 425 within 3-4 days.

According to Karvy, day traders can buy the stock above Rs 402 with a stop loss of Rs 390.

Shares of the company, on Thursday (April 09), closed at Rs 395.85 on the Bombay Stock Exchange (BSE). Current EPS & P/E ratio stood at 18.79 and 22.20 respectively. The share price has seen a 52-week high of Rs 954.80 and a low of Rs 164.50 on BSE.

Sterlite Industries (SIL) has signed a new deal with ASARCO, American copper smelting and refining company, US, with a smelting capacity of 0.25mtpa and 3 copper mines with a total reserve of 5mt in copper.

SIL will make an upfront payment of $1.1 billion and an additional payment of $0.6 billion staggered in the next 9 years period, which will be paid via the ASARCO income.

The $0.6 billion will be paid with twelve-monthly installments of $20 million from the end of 2nd year for a period of 7 years and a terminal payment of $460 million. There is an additional clause that if yearly average of every day copper rates in a particular year augments beyond $6,000/t, then the yearly installments will be proportionately increased subject to a maximum of $66.67 million, keeping full payment to $0.6 billion.

The discounted value of $0.6 billion comes to about $0.33 billion assuming payment of $20 million each year and assuming total payment of $66.67 million yearly, discounted value comes to about $0.39 billion. The attainment will be on ``cash free debt free`` basis, implying no cash and no legacy debt.

The valuation of ASARCO by SIL comes to approximately 6x EV/EBITDA. The current bid amount is significantly under the earlier bid of $2.6 billion and looks to be fair valuation of ASARCO considering the current copper prices at LME.